Second Quarter Review 24 / April / 2015 Forward-Looking - PowerPoint PPT Presentation

Second Quarter Review 24 / April / 2015

Forward-Looking Statements / Safe Harbor This presentation contains a number of forward-looking statements. In many cases forward-looking statements are identified by words, and variations of words, such as "anticipate", "estimate", "believe", “commit”, "continue", "could", "intend", "may", "plan", "potential", "predict", "positioned", "should", "will", "expect", "objective", "projection", "forecast", "goal", "guidance", "outlook", "effort", "target", and other similar words. However, the absence of these words does not mean the statements are not forward-looking. Examples of forward-looking statements include, but are not limited to, revenue, operating income and other financial projections, statements regarding the health and growth prospects of the industries and end markets in which Tyco operates, the leadership, resources, potential, priorities, and opportunities for Tyco in the future, statements regarding other projections, earnings and Tyco’s credit profile, capital allocation priorities and other capital market related activities, and statements regarding Tyco's acquisition, divestiture, restructuring and other productivity initiatives. The forward-looking statements in this presentation are based on current expectations and assumptions that are subject to risks and uncertainties, many of which are outside of our control, and could cause results to materially differ from expectations. Such risks and uncertainties include, but are not limited to:  Economic, business competitive, technological or regulatory factors that  The possible effects on us of pending and future legislation in the United adversely impact Tyco or the markets and industries in which it States that may limit or eliminate potential U.S. tax benefits resulting from competes; Tyco’s jurisdiction of incorporation or deny U.S. government contracts to us based upon Tyco’s jurisdiction of incorporation;  Changes in tax requirements (including tax rate changes, new tax laws or treaties and revised tax law interpretations);  The ability of the Company to achieve anticipated cost savings and to execute on its portfolio refinement and acquisition strategies, including  The ability of the Company, its employees and its agents to comply with successfully integrating acquired operations; complex and continually changing laws and regulations that govern our international operations, including the U.S. Foreign Corrupt Practices  The ability of the Company to realize the expected benefits of the 2012 Act, similar anti-bribery laws in other jurisdictions, a variety of export separation transactions, including the integration of its commercial security control, customs, currency exchange control and transfer pricing and fire protection businesses; regulations, and our corporate policies governing these matters;  Availability and fluctuations in the prices of key raw materials, and events  The outcome of litigation, arbitrations and governmental proceedings, that could impact the ability of our suppliers to perform ; including the effect of income tax audits, appeals and litigation;  Natural events such as severe weather, fires, floods and earthquakes.  Economic, legal and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across borders;  Changes in capital market conditions, including availability of funding sources, currency exchange rate fluctuations, and interest rate fluctuations and other changes in borrowing cost; More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2014 and in subsequent filings. Tyco is under no obligation (and expressly disclaims any obligation) to update its forward-looking statements. 2

Another Strong Quarter Of Operational Performance $0.05 ($0.03) $0.55 $0.05 $0.47 $0.05 ($0.04) $0.43 Q2'14 EPS* Q2'14 $21M Normalized Operations Share Count Corporate & FX Headwind Reported Adj. for Discop Recovery Q2'14 EPS* Below-the-Line Q2'15 EPS* Earnings Per Share Increased 17% Over Prior Period * EPS from continuing operations before special items is a non-GAAP measure. For a reconciliation to the most 3 comparable GAAP measures, please see Appendix.

Continued EPS Headwinds From Strong US Dollar Original FX Prior FX Current FX Guidance Guidance Guidance Q4’14 Q1’15 Q2’15 Earnings Call Earnings Call Earnings Call 2015 ($255M) ($585M) ($645M) Revenue (~4%) (~6%) (~6%) Headwind Top Foreign Currency Exposures 2015 EPS ($0.07) ($0.16) ($0.18) Headwind Prior FX Current FX Variance Rates* Rates* EUR/USD 1.12 1.06 (5%) GBP/USD 1.50 1.48 (1%) USD/CAD 1.26 1.25 1% AUD/USD 0.80 0.76 (5%) Incremental $0.02 FX Headwind To 2015 EPS Guidance All Translational Exposure * Prior foreign exchange rates quoted from January 23, 2015. Current foreign exchange rates quoted as of 4 April 16, 2015.

Oil & Gas Market Exposure Exposure Region Commentary ($ of Annual Sales) North  Cancellation/delays to installation projects in Alberta America Canada ~$55M  High margin service work down I&S  Western Canada economy severely impacted  Discretionary service maintenance delays in North Sea Rest of UK ~$285M  Decline of new install oil & gas projects in Asia World I&S Asia  Fire Products special hazards vertical Europe Global Middle East ~$175M  Life Safety gas detection with POG Products Canada ~$515M or ~5% of Total Revenue Total Tyco Exposure Expect ~15% Decline From Oil & Gas Vertical For 2015 5

Geographic & End Market Overview North America  Commercial Industrial  Institutional Asia  Retail  Commercial  POG  POG  Hospitality Retail Infrastructure EMEA Latin America Pacific  Commercial  Retail Govt / Institutional Residential  Commercial Commercial  POG Industrial  Industrial  Industrial  Residential  Mining  Retail Weaker Macro Environment 6

Q2 2015 Results – Financial Overview (EPS amounts are fully diluted and attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Q2FY15 Q2FY14 Change $2,430 $2,480 (2%) Revenue Segment Operating Income $331 $346** (4%)** before special items* Segment Operating Margin 13.6% 14.0%** (40bps)** before special items* Corporate Expense $51 $54 6% before special items* Tax Rate 11.5% 16.9% before special items* EPS from Cont. Ops. $0.55 $0.47 17% before special items* Another Quarter Of Strong Earnings Growth * Segment operating income, segment operating margin, corporate expense, tax rate and EPS from continuing operations before special items are non-GAAP 7 measures. For a reconciliation to the most comparable GAAP measures, please see Appendix. ** Includes $21 million insurance recovery; year-on-year change +2%; year-on-year margin improvement +50bps. See Appendix for reconciliation.

Second Quarter Highlights Revenue of $2.43 billion declined 2% year over year on a reported basis, including 6% headwind from foreign currency exchange rates • Revenue ex. FX grew +4% with organic growth +2% and acquisitions contributing 2% • Excluding FX service +2%, installation +5%, products +11% Before special items, segment operating income* was $331 million and the operating margin* decreased 40 basis points to 13.6% • Normalizing for prior year $21 million insurance recovery, segment operating margin expanded +50bps Earnings per share before special items* increases $0.08 or 17% year over year Net $0.01 $0.05 ($0.04) $0.05 $0.55 $0.05 ($0.03) $0.47 Q2'14 EPS* Operations Share Count FX Headwind Corporate & Q2'14 $21M Reported Adj. for Discop Below-the-Line Recovery Q2'15 EPS* * Organic revenue, segment operating income, segment operating margin and earnings per share before special items are 8 non-GAAP measures. For a reconciliation to the most comparable GAAP measures, please see Appendix.

Second Quarter Highlights Continued Orders growth of 1%, excluding impact of foreign currency • Products +9%, Service +2% and Installation (6%) Backlog of $4.7 billion was relatively flat on both a year over year and quarter sequential basis, excluding impact of foreign currency 9